Understanding Dynamics of Trust in Business Relationships
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Understanding Dynamics of Trust in Business Relationships A thesis submitted in partial fulfilment of the requirements for the degree of Doctor of Philosophy in Marketing Yimin Huang School of Marketing Australian School of Business The University of New South Wales Sydney, Australia April, 2010 ORIGINALITY STATEMENT ‘I hereby declare that this submission is my own work and to the best of my knowledge it contains no materials previously published or written by another person, or substantial proportions of material which have been accepted for the award of any other degree or diploma at UNSW or any other educational institution, except where due acknowledgement is made in the thesis. Any contribution made to the research by others, with whom I have worked at UNSW or elsewhere, is explicitly acknowledged in the thesis. I also declare that the intellectual content of this thesis is the product of my own work, except to the extent that assistance from others in the project's design and conception or in style, presentation and linguistic expression is acknowledged.’ Signed …………………………………………….............. Date …………………………………………….............. Abstract Trust has been widely studied in the context of business relationships and is viewed as one of the drivers for relationship development. However, it has long been treated as a static construct explained in terms of other relationship variables. The way it changes over time and the drivers of this have been largely ignored and underexplored. The research reported in this thesis adopts an evolutionary perspective in understanding the dynamics of trust in dyadic business relationships. In particular, it addresses two research questions. Firstly, how does trust change and develop over the course of a relation? Secondly, what are the underlying mechanisms that drive the dynamics of trust in relationship development? Longitudinal case studies are conducted using event-based narrative analysis, assisted by the computer software of ETHNO. The event-based narrative analysis is still being developed and has not been used in marketing before. Collectively, these studies reveal important and interesting findings of the dynamics of trust in business relationships. A key conceptual distinction is made, that is often ignored in the literature, i.e. between trusting attitudes and trusting actions, though they are interconnected. The existence of trusting attitudes is a prerequisite for trusting actions to take place, but the occurrence of a trusting action is also impacted by trusting firms’ behavioral intentions subject to particular external, internal and relational environments at a given time. The trusting actions and their outcomes, in turn, reshape, redevelop and restructure the nature and extent of trusting attitudes held by partner firms in the relationship. Different sets of mechanisms are identified underlying changes in trusting attitudes and the emergence of trusting actions. Changes/non-changes in trusting attitudes are mainly explained by cognitive mechanisms, such as learning, adapting, stereotyping, evaluating, affective, transferring, and institutionalizing mechanisms. The emergence of trusting actions is more strategic and controlled and is affected by not only cognitive mechanisms but also by various types of economic, psychological and emotional mechanisms. Being one of the first efforts to investigate the dynamics of trust over time in real business relationships, this research fills an important knowledge gap. The research leads to the identification of several fruitful areas for future research including further studies of business relations and networks in other contexts and the development of agent based models of relationship and network dynamics and evolution. The results and the mechanisms identified are of value also to managers in terms of how to develop better strategies for developing, maintaining and using trust in business relationships. I DEDICATION To my loving family II ACKNOWLEDGEMENTS Being the daughter to a professor, I was born with a bookmark in my mouth. I knew I wanted to be a good scholar, as my Dad, and to be that, I should be, first of all, a Dr.. But what I did not know was when the decision came to leave all my career behind and to go back to university to be a full-time PhD student, it was nothing to do with my dream but all about love. And the journey of completing this PhD has been filled with power of love since then. First and foremost, I would like to thank Professor Ian Wilkinson for guiding me through to today’s achievement. Ian is my supervisor, but he is far more than simply being a supervisor. He has been a mentor, a good friend, my academic father. He has heard my laughters and seen my tears. He is always there to listen, to support, to help and to hug. I have benefitted greatly from Ian’s extensive knowledge base, but I am especially grateful for him to shape my critical and creative thinking by encouraging me to challenge. Intellectual argument between Ian and me, though I lost most of the time so far, is an integral part in shaping my academic rigor. It would not have been possible for me to complete the tough and rough PhD journey without the supporting and loving environment in School of Marketing. I am especially indebted to Prof. Paul Patteron for building up such an environment, as well as for his generous support and continuous encouragement at various stages of my PhD. I wish to give special thanks to Marion and Nadia for always being around with love and care. I am grateful to Prof. Roger Layton and Prof. Mark Uncles for their constructive feedback and practical guidance to my research. I thank Margot, Paula and many other colleagues for their kindness and assistance. I am so blessed to gain enormous peer support from the research student community in the School. My seniors, including Gary Buttriss, Emma Macdonald, Simon Kwok and Emma Wong, have been so kind to share their experiences and provide helpful opinions whenever needed. I am particularly lucky to have met my best friends during my PhD, Cathy Xu, Laypeng Tan, Hongwei Lu and Vinh La. I owe so much gratitude to them for their generous love and heartfelt support all the way along. We have been through many III ups and downs. In the end, we find more about ourselves and see more in others. The journey, as put by Laypeng, then becomes a “bearable, serious fun”. There are many people out of School of Marketing that I wish to thank to as well. Among them, I am especially indebted to Prof. Louise Young, for her constructive comment on my research and caring support at my difficult times. My gratitude also goes to Prof. Xiongwen Lu from School of Management at Fudan University, who introduced to me to the discipline of Marketing and fostered my initial interest in this area. Last but never least, my sincerest and deepest gratitude goes to my family. I am truly indebted to my Mum and Dad for their trust in me and the sacrifices they have made to allow me to pursue my dream. I am thankful to my Dad, who has implanted in me some essential qualities to be a good researcher: enthusiasm, endurance and integrity. I am so gratetful to my Mum, who is always ready to listen and to share. And she makes me NOT a boring bookworm. I am so blessed to have been loved and cared and supported by Daniel, my husband, another inquisitive mind in my family. He is a fountain of funny jokes and knows best how to cheer me up. While sometimes I could be an idea volcano, he is the person that cools me down and pulls me back to reality. So thank you, honey, for being an inspiration in my life. Finally, here comes Zhiyu, the little angel sent by God to shine my life. Being a proud Mum, I am so motivated to be a better person, to make my daughter be the same prideful of me. Love guided me to the journey of PhD. When I had thought the journey has finished, I suddenly realized it is just a beginning, never an end. IV Table of Contents Chapter 1 Introduction...................................................................................................1 Chapter 2 Literature Review (Part I)...........................................................................4 2.1 Understanding business relationships: an IMP perspective....................................4 2.1.1 The nature of business relationships ................................................................5 2.1.2 Structural characteristics of business relationships..........................................7 2.1.3 Process characteristics of business relationships .............................................9 2.1.4 Research gaps in IMP studies ........................................................................11 2.2 Major studies on trust in business relationships....................................................13 2.2.1 Background of research on trust in business relationships ............................13 2.2.2 Major studies on trust in business relationships.............................................14 2.2.3 Research gaps.................................................................................................21 Chapter 3 Literature Review (Part II)........................................................................25 3.1 Theories of organizational change ........................................................................25 3.2 Mechanisms ..........................................................................................................32 Chapter 4 Conceptual Model and Propositions .........................................................41